Global Dividend ETFs: Diversification Or More Of The Same?

Income investors who purchase regionally-themed or industry-themed equity exchange-traded funds for dividend yield may be embracing risks they do not expect. The logic behind adding dividend-paying stocks from other countries to diversify an income portfolio is sound, but some fund holdings are hard to swallow. The Allure of Using Themed ETFs for Income Income investors who purchase dividend paying stocks hope to find steady income. A diversified mix of dividend-paying stocks, well-rated corporate bonds, and small allocations to alternative investments is a typical strategy to achieve this goal. Most investors tend to over-invest in their domestic markets and can reduce risk by buying foreign stocks. Diversification across markets is a "free lunch" which, if done prudently, reduces uncertainty without lowering returns. On the surface, themed ETFs appear to meet the needs of investors seeking dividend paying funds. These ETFs have familiar, easy to understand strategies like Belgian stocks or solar... Read more